One of the predominant ways businesses protect their brands is through Federal trademark registration at the United States Patent and Trademark Office (USPTO). In order to federally register a trademark, the trademark must be used in interstate commerce—lawfully. Because marijuana is federally illegal, it is impossible for a marijuana business to lawfully use a trademark in connection with marijuana and/or marijuana-specific goods and services in interstate commerce. Since Federal trademark registration is not an option, marijuana businesses need to get creative in how they protect their brands. Here are some alternative options for how a marijuana business can protect its brands.

Obtaining Federal Registration for Analogous Goods and Services

One tactic marijuana businesses have used to try and protect their brands is to obtain federal trademark registration for goods and services analogous to marijuana goods and services. These businesses might apply for trademark registration in connection with goods and services like tobacco, smoking devices, rolling papers, vaporizers, clothing, hats, and retail tobacco stores or services. The idea behind this tactic is rooted in trademark law which recognizes that similar marks used on related goods/services can cause consumer confusion as to the origin of those goods/services. By obtaining a federal registration for related goods and services, these businesses believe that they will be able to prevent third parties from using or obtaining registrations for confusingly similar trademarks in connection with marijuana goods and services if and when marijuana is legalized. They’re taking a gamble that their rights to, for example, a tobacco-related trademark will keep others from using that name in connection with marijuana.

The logic is, at least in theory, sound, and we see this type of thing quite often with alcohol beverage trademarks. The USPTO routinely refuses trademark applications for beer that are similar to existing registrations for wine or spirits. Alcohol beverage trademarks are also commonly refused in light of similar prior registrations for restaurants and bars, or even glassware.

There are, of course, some caveats with this approach. First, to apply for a trademark for analogous goods/services, you must have a bona fide intent to use the trademark in connection with those analogous goods/services, and/or (ultimately) actually use the trademark in connection with those analogous goods/services in order for the trademark to register. Someone who is merely trying to reserve a right in a name for marijuana is likely vulnerable to opposition or cancellation. Second, we don’t know whether (or the degree to which) the USPTO or courts will treat tobacco and tobacco-related goods/services and marijuana and marijuana-related goods/services as related goods. We can predict that these bodies will treat them as related goods, but this has not yet been tested. Finally, there are other factors at play, too, such as the difference in the trade channels in which tobacco and marijuana do (or will) travel, and possibly differences in consumer sophistication.

Due to this uncertainty, marijuana businesses should consider additional tactics to protect their brands.

Relying on Common Law Rights

Are you currently (and lawfully) selling marijuana under a brand name in a state in which marijuana has been legalized? If so, chances are you already have some “common law” trademark rights to that brand name. Common law trademark rights require no registration–they arise out of, and rely on continued and substantially exclusive use of, a trademark in connection with the sale of goods or services. These rights are limited to the goods/services in connection with which the trademark is used, and the geographic areas in which the mark is used (including the areas of “reasonable expansion”). So long as you maintain these common law rights by continuing to use your trademark, you can enforce these rights against junior users of confusingly similar marks on confusingly similar goods/services within your geographic area. If you have a mark you are selling products under, you should put third parties on notice of your claim to a the mark by placing the letters TM (e.g. HANGRY BUDS) next to the mark everywhere you use it (on packaging, advertising, etc.). Also, you should take care to use your mark in a consistent manner (same spelling, same capitalization, etc.) to strengthen your claim to the mark.

Relying on common-law trademark rights can be a good fallback solution for preventing third parties in your geographic area from using confusingly similar marijuana trademarks. But, common-law rights have limitations, and require excellent recordkeeping and proof to substantiate a claim to a mark, as of a certain date.

Obtaining State Trademark Registration

As illustrated above, common-law rights provide some fallback rights to a mark, but are somewhat limited. A much better solution is to seek a state trademark registration. Generally speaking, a state trademark registration provides you with the exclusive right to use a mark in connection with the described goods as of the date of filing. Each state has their own requirements for registration, but in general, they can be obtained by applying, paying a fee, and showing use of a trademark in connection with certain goods in the particular state. Here is a list of states where marijuana trademark registration is possible, as of late 2017 (the list is growing):

Alaska

Arizona

Arkansas

California (January 1, 2018)

Colorado

Florida

Hawaii

Indiana

Louisiana

Maine

Maryland

Michigan

Montana

Nevada

New York

North Dakota

Oregon

Vermont

Washington

As mentioned above, state trademark registrations entitle the registrant to the exclusive right to use the trademark within the entire state, and are prima facie evidence of the validity of the registration and the registrant’s ownership of the registration. Extending the example from above, a state trademark registrant based in San Francisco could rely on her state trademark registration to go after a junior user of a confusingly similar trademark in Los Angeles (or anywhere else that may be outside the registrant’s geographic area).

Conclusion

Just like other businesses, Marijuana businesses should prioritize protecting their brands, but due to various restrictions, must get creative in doing so. While federal trademark registration for marijuana and marijuana-specific goods/services is unavailable currently, obtaining federal registration for analogous goods may allow you to prevent others from using or registering the trademark in connection with marijuana. Relying on common law rights alone provides limited rights but might cause headaches down the road if you plan to expand beyond your initial territory, or if you have a difficult time substantiating your rights to an early sale date. Obtaining a state trademark registration is likely the best bet for most Marijuana businesses, at least until federal law changes and federal registration becomes a possibility.

There is lots of focus on what the craft people are up to, and certainly there is much movement in that regard. But here we turn back to the big companies, and how they see things. Artisan Spirit magazine recently published my email interview with Tom Lalla. Tom was the head lawyer at Pernod for many years. An excerpt is below, and you can find the full article at the link.

Who were the legendary beverage lawyers before you, and what made them so?

The outstanding, legendary beverage lawyer of the past few generations was Abe Buchman. I worked with Abe and his firm for 10 years and then continued to work with him when I joined Pernod Ricard. Abe was a mentor and a role model for tireless devotion to the industry. Abe taught me the necessity of finding practical solutions for our clients’ issues. Sometimes, as lawyers, we lose sight of being practical. We get hung up in the legal niceties of an issue. What Abe stressed was that we find a solution that was practical for the client and accomplished the client’s goals without running afoul of the legal requirements. Another legend was Bill Schreiber. I had the pleasure of working with both Bill and Abe when the Buchman and Schreiber firms merged in 1986. Having both Abe and Bill together in the same office was a beverage alcohol lawyer’s dream come true. With so much shared knowledge about the law, the industry, and its players and so many exciting projects being worked on by them, it was a unique moment in my career.

Very few other people have a vantage point as good as Tom’s, after many decades building Pernod, and working at a top law firm specializing in alcohol beverage matters.

I heard about this on the radio this morning, on the way in. Apparently it’s illegal to allow farms, or picking fruit for free, on New York City lands — so these guys put it on a barge. It struck me as pretty crafty. That is, crafty in a good way.

The rules say:

Public foraging and policy
According to the New York City Parks Department

No person shall deface, write upon, injure, sever, mutilate, kill or remove from the ground any trees under the jurisdiction of the Department without permission of the Commissioner.

No person shall deface, write upon, sever, mutilate, kill or remove from the ground any plants, flowers, shrubs or other vegetation under the jurisdiction of the Department without permission of the Commissioner.

Swale says:

Because of the common laws of New York City’s waterways, Swale is able to act as a test case as an edible public food forest. Swale is built atop a barge that was once used for hauling sand to construction sites before it was re-purposed for growing food.

We are always on the lookout for what is crafty, in a good way. A CBS story on this is here. I wonder how well an alcohol beverage operation would fare with a similar sleight of hand.

A recent issue of the TTB Newsletter had some good information about Flavor Ingredient Data Sheets — often referred to as FIDSs. FIDSs can be very important, and so it is good to have this information readily available.

The FAQ explains that a FIDS is typically needed when “you’re using a compounded flavor that was purchased from a flavor manufacturer. … For this purpose, a compounded flavor includes any flavor, cloudifier, or blender that consists of multiple ingredients that are combined to produce a particular taste characteristic.” The same FAQ provides a blank, fillable FIDS form.

The FAQ emphasizes that you should get the FIDS from your flavor supplier; it is not a document that can or should normally be prepared by the producer of the end beverage. The FIDS form first burst onto the scene 20 or more years ago, and has not changed very much in the intervening years. It covers the basics like, is the flavor approved, safe, natural, and does it contain any colors or other ingredients with labeling or safety implications. In an attempt to go a bit beyond where TTB’s document already goes, here are a few common examples of where a FIDS is and is not indicated.

Cherry Liqueur (made with Natural Cherry Flavor)

Get a FIDS for the cherry flavor

Cherry Liqueur (made with cherries)

Don’t bother with the FIDS because, as above, the FIDS is intended to be used with compounded flavors

Cherry Liqueur (made with artificial flavor)

Trick question because liqueurs must contain at least one natural flavor and can’t contain any artificial flavors, so the FIDS is not going to help here

Straight Bourbon Whiskey

If you have a FIDS you are probably going in the wrong direction because this category should not have anything added

Malt Beverage with Natural Cherry Flavor

Needs a FIDS

Malt Beverage Brewed with Cherry Juice

Does not need a FIDS or a formula approval. Does not need a formula approval due to the tremendously important liberalizations at TTB Ruling 2015-1 and the accompanying list of exempt ingredients and processes. Does not need a FIDS because the juice is not compounded.

Grape Wine with Natural Cherry Flavor and a Cloudifier

You need a FIDS for the cherry flavor, and for the cloud. Even though the cloud is not really a flavor and probably does not need to be mentioned on the label, it does need a FIDS because it’s probably compounded (of various ingredients) like a flavor.

As soon as you start talking to your flavor company, it’s worth asking which flavors do and don’t already have a FIDS. That’s because if you need one, but the flavor company does not have one yet, it could take them quite a few weeks to get the TTB flavor approval needed as a foundation for the FIDS. You should not assume all flavors have a FIDS because not all flavors are made in the US, or intended for use in alcohol beverages, where the above rules most directly apply. As yet one more example, if you are making pickle-flavored potato chips in Parguay, you probably don’t need a FIDS or a TTB formula approval.

In the latest iteration, these Prop. 65 warnings are starting to pop up. Off toward the upper right the approved label says:

CA PROP 65 WARNING: SOME MATERIALS USED IN THE COLORED DECORATIONS ON THIS CONTAINER CONTAIN CADMIUM, A CHEMICAL KNOWN TO THE STATE OF CALIFORNIA TO CAUSE BIRTH DEFECTS OR REPRODUCTIVE HARM.

The label approval for this beer, along with a qualification about this extra warning, is here. It seems like labels of this sort started to pop up around 2012, and so far there at least 50 such approvals (referring to Prop. 65 and things like cadmium). Here is a second, albeit Stupid, example.

TTB approved this label July 18, 2017. There are very few other TTB labels that mention CANNABIS and SATIVA. Perhaps this product has hemp seeds, along the lines of this 2014 label approval. Then again, perhaps the Lithuanian product merely tastes like hemp or cannabis, as a literal reading of the label would suggest.

Though I see a few signs of cannabis and hemp, in recent approvals, I am not seeing any that mention CBD (aka, cannabidiol). CBD is one of many cannabinoids in cannabis; it is usually viewed as not intoxicating, though it may have various other impacts on brain function. This April 20, 2017 article does a good job of explaining about the barriers to seeing CBD in an alcohol beverage product, or on the label.

Although Dad and Dudes (“D&D,” the Colorado brewer) probably wanted to market something along the lines shown in the photo above, the actual federal approval is quite a bit less adventurous, as in the label image here.

The text near the green arrow, on a related approval, tends to show that D&D grudgingly banished the “additive(s)”.

The article says D&D:

will be fighting the federal government over a beer brewed with non-psychoactive CBD. …

Last September, Dad & Dudes was the talk of the town when it became the first brewery in the country to gain approval from [TTB] for a non-THC, cannabis-infused beer. The process took about a year, because the TTB required a thorough analysis of the ingredients and the recipe before it would give formula approval for Dad & Dudes’ patent-pending process and its beer.

[D&D] then announced plans for a new beer, General Washington’s Secret Stash, which would be brewed with cannabidiol — a hemp extract also known as CBD — and distributed in [a few states].

But on December 14, the U.S. Drug Enforcement Administration surprised the hemp and cannabis industries nationwide by declaring that it still considered marijuana derivatives like cannabidiol and hemp extract — even the non-psychoactive ones — to be Schedule 1 substances, just like marijuana. The announcement meant that these substances couldn’t be sold or carried across state lines, even if they are legal in some states.

It also meant that the TTB, which had granted formula approval to Dad & Dudes, no longer wanted the brewery to make the beer. The bureau gave the brewery ten days to surrender its formula.

TTB’s hemp-related policy is here and seems to date all the way back to 2000, a startlingly long time ago, in view of all the change swirling around these issues. DPF’s Lex Vini blog provides a good reminder about why it would not be prudent to plow ahead and make such products, before the policy gets thrashed about or modified:

California newspapers have recently reported on in-state breweries and wineries that are making CBD-infused products. Given TTB’s treatment of Dad & Dudes Breweria, however, it is clear that the federal government believes that any such product requires a TTB-approved formula. Moreover, given recent statements by the U.S. Attorney General, it seems unlikely that the current administration would permit TTB to grant formulas for the production of a product that involves the infusion of a Schedule I drug. Producers engaged in making CBD-infused alcohol products absent a formula may be putting their federal licensing at risk until such time, at least, as the DEA changes its mind about the classification of marijuana extracts.

This deftly navigates the differences between FDA and TTB rules. If it had a little more alcohol, or a different type of alcohol, at least these 5 noted things probably would not fly.

So far as we know, TTB does not allow electrolyte references on alcohol beverage labels.

Nor does TTB allow vitamin references.

From time to time in the past TTB has frowned upon prominent refresh claims on the grounds that they may imply therapeutic value.

As of this writing it does not appear that TTB is ok with GMO claims.

Finally, I would bet money against TTB allowing this term (nutritious).

All these claims are possible, and not suicidal, because the product is wine based, and under 7% alc./vol., such that FDA has full control over the labeling, while TTB retains control of the taxation and formula. The front label mentions that it’s a wine specialty, as here.

If this were 7% or more, TTB would probably require something a lot more descriptive than “Wine Specialty,” and would not allow this 12 ounce size, and would also require ABV to be spelled out. The product is Coco Cocktail, and there is no TTB label approval to which to point.

(3) “Rock and rye”, “rock and bourbon”, “rock and brandy”, “rock and rum” are liqueurs, bottled at not less than 48° proof, in which, in the case of rock and rye and rock and bourbon, not less than 51 percent, on a proof gallon basis, of the distilled spirits used are, respectively, rye or bourbon whisky, straight rye or straight bourbon whisky, or whisky distilled from a rye or bourbon mash, and, in the case of rock and brandy and rock and rum, the distilled spirits used are all grape brandy or rum, respectively; containing rock candy or sugar syrup, with or without the addition of fruit, fruit juices, or other natural flavoring materials, and possessing, respectively, a predominant characteristic rye, bourbon, brandy, or rum flavor derived from the distilled spirits used. Wine, if used, must be within the 21⁄2 percent limitation provided in §5.23 for harmless coloring, flavoring, and blending materials.

Bearing in mind these constraints, Hochstadter’s cute little can, and the above imagery, let us know which one looks best.

Find out more about how TTB and federal agencies really work, in this discussion with Art Libertucci, from the Summer 2017 issue of Artisan Spirit magazine. Art ran TTB for many years, and had a long career in ATF before that. He has a huge amount of experience when it comes to alcohol beverages, rules, taxes, Washington, and so on.

Here as an excerpt, where Art describes the beginning of this journey.

I started my government career as an Inspector for the Alcohol and Tobacco Tax Division of the IRS. At that time, neither ATF nor TTB existed as separate bureaus. The regulation of alcohol and tobacco products and their taxation were the responsibility of the IRS. I applied for the job after a friend told me about how he was taking an exam for jobs in the federal government. I had been drafted back then in 1969 (I was a draft lottery pick) and that day I was sent home after reporting for duty, having failed my physical exam. My friend told me he was taking the job exam that Saturday and I should go with him and take the test. At that time, taking the test was done at the post office and on a walk in basis. I took the test and received scores a month later. I received my first job offer from ATF, to become an Inspector. I interviewed for the job, was offered a position in Boston, but it was later rescinded due to a sudden federal job freeze. A week later I was called and asked if I would consider the same position in New York City, where they had been given a job freeze exemption. I took the offer and started my career on March 17th, 1970 in New York.

If my math is correct this gives Art 47 years (and counting) of experience, watching the alcohol beverage business from a front row seat.

Well, we may have only one retailer in the near future — AmazonWholeFoods. But we sure have a lot of beer to choose from.

This jumped out at me when looking at beer approvals from a recent 10 day period in 2017. I saw no less than 720 new brands/approvals — just for beer — in this small and recent time period. Most of them seem like just about the opposite of Budweiser and Coors.

By contrast, I looked at the same 10 day period, 10 years prior. The landscape is altogether different. In the 2007 period I see a relatively puny 175 approvals. The overwhelming preponderance of those labels are from big or very big companies: Miller, A-B, Sam Adams.*

In the 2017 period I see almost no mega-brews. If this is not a revolution, it seems to be a radical change at least, in just half a generation or less. Amazon has well proven they can stock and sell a lot of books and other SKUs, without losing a bunch of money. Let’s see how they do with a few hundred thousand beers.